Happy New Year!
Let’s face it, 2020 threw us a lot of curve balls, personally and professionally. With a new year unfolding, now is the perfect time to be proactive about areas of your financial operation for which you could have been better prepared. Here are a few relatively easy ways to improve your company’s bookkeeping and your operational efficiency.
- Implement accounting software – Deploy this now, so that your business bookkeeping is done correctly from the start of the year. When data is entered correctly and on a timely basis, you always have visibility into your income and expenses, and can easily create financial forecasts, pull balance sheets, compare your budget vs. actual numbers, and more.
NOTE: Your tax returns may be more complex than usual if you got an EIDL loan or PPP money, so getting your financial records in order now will greatly help your tax preparer.
- Automate bill paying – For regular monthly expenses (such as rent, insurance or utilities), consider auto debits from your business checking account so you never miss a payment (and stay on good terms with your vendors). Still writing checks? Online bill paying in general saves you time you could use for more beneficial activities like business development, marketing, and employee training.
- Collections procedure – With the financial strains imposed on many businesses last year, your customers may be having trouble paying your invoices on time. Have a process (and accounting software) in place that provides aging invoice alerts so you can reach out with appropriate letters or phone calls. Showing that you understand the situation should be part of that communication. Demonstrate that you value your relationship by making it easy for customers to work with you, with flexible payment plans or other accommodations. Call to find out how they’re doing and how you can help. Empathy goes a long way in maintaining business relationships and fosters customer loyalty.
PPP – Get Ready for Round 2
If you got money last year, check with your lender about whether the loan forgiveness application is relevant to your situation, or find out what the latest rules are. More money is coming online for business owners who qualify; however, it can be hard to know if applying for additional funds is the right course of action. For example:
A restaurant owner received PPP funds last spring and used it for payroll and rent (two qualified expenses) while the restaurant was closed. That money is spent, and he is now paying his employees and the rent while the reopened restaurant struggles at 25% occupancy. Like many other business owners, he is facing some difficult choices—continue to struggle along and hope for the best; shift the business model; take another PPP loan; borrow from elsewhere; or close. What would you do?
Getting your records in order now is the first step to determining a direction for your business. If you need help reviewing your financials and devising a long-term plan for your operation’s sustainability and profitability, we can help. Contact CFO Your Way about our on-demand support services: firstname.lastname@example.org or (973) 897-0650.
To a great start to 2021!